|
|
27/08/2008 |
| In keeping with the recent uptrend, inflation, as measured by the wholesale price index, rose further to a new 13-year high of 12.63 per cent for the week ended August 9, 2008, owing to rising prices of vegetables, pulses and milk, from 12.44 per cent in the previous week and 4.24 per cent in the corresponding week of the previous year.
Annual inflation of 30 essential commodities, however, continues to be range bound between 5.7 per cent and 6.7 per cent in 19 weeks of the current fiscal.
During the week, tea became costlier by 2 per cent and milk turned expensive by 1 per cent. Prices of pulses and mustard oil too firmed up by one per cent each.
While prices of cotton yarn rose by 8 per cent during the week, polyester became dearer by 7 per cent. Prices of imported edible oils, however, declined by 6 per cent.
In a bid to check the unrelenting hike in the price of food commodities such as pulses, wheat, rice and sugar, the centre has initiated a spate of supply-side measures. It will release five million tonnes of wheat and one million tonnes of rice into the open market, even as it gears up to release an additional five lakh tonnes of sugar into the market within the next seven days. The government is also examining a scheme, as part of controlling food prices, to supply four lakh tonnes of pulses at a subsidy of Rs 10 per kg.
Corporates raise funds through commercial papers
Hit by high interest rates, India Inc. appears to be taking the commercial paper (CP) route to shore up funds even as it tries to complete mega investment plans. CP is generally used to purchase inventory or to manage working capital.
The outstanding, amount of CP issued by corporates rose by 44 per cent in just three months to over Rs 46,000 crore at the end of June 2008 from Rs 32,592 crore at the end of March 2008.
CPs are much more efficient short-term instrument in the capital market. Rates have been increasing over the few months. The rates for 90-day paper appear to have touched 11 per cent.
Even if some banks start to cut lending rates in the next six months, overall borrowing costs will remain high until the last quarter of the fiscal 2009.
Global demand for oil to go up by 1 pc in 2009
The International Energy Agency (IEA)—the energy policy advisor to 27 developed countries—has downgraded the estimated growth in petroleum products demand to just 0.86 million barrels per day (mbpd) in 2009, compared to an incremental growth of 0.89 mbpd in 2008. According to the latest estimates, the global demand for oil is expected to inch up by 1 per cent to 87.7 mbpd in 2009 from 86.9 mbpd in 2008.
High energy prices and economic slowdown are weighing down on the consumption of petroleum products. The slowdown in product demand is so sever that the margins available on production of petrol, naphtna and fuel oil for refineries have turned negative.
Domestic petroleum refiners, who have been enjoying rising refining margins over the past couple of years, reported record high refining margins during the quarter ended June 2008. However, there are definite signs that the industry may have hit a peak and the way forward is just downwards. The growth in demand for petroleum products is slowing down and with a number of refinery projects coming on stream, supply of these products is set to go up substantially.
India Inc. Big companies perform well
India Inc’s big companies are doing well. Companies with quarterly revenue of over Rs 4,000-crore (approx. $ 1 billion) have recorded a faster topline growth, compared to other Indian firms, in the Q1 of the fiscal 2009. While revenues of such big companies have grown by 33 per cent (24 per cent last year), the growth figure for the entire sample is pegged at 24 per cent (16 per cent last year).
An analysis of close to 4,000 companies that have announced their Q1 results confirms the fact that topline growth for the quarter has been robust and the best in the past four quarters. The slowdown shown in IIP figures is not clearly being reflected in net sales of corporate india.
But profits are badly hit. Here too, large firms have fared better. Even as net profit growth for large firms has slid sharply from around 30 per cent last year and has barely managed to cross the single digit figure, at 10 per cent it is much higher than the aggregate sample net profit growth of 6 per cent.
RBI’s forex reserves down by $ 3.8 billion
India’s foreign exchange reserves dipped below the $ 300-billion mark after hitting that level six months ago. The fall in reserves comes on the back of a selling spree to meet the growing dollar demand, especaily from state-owned oil companies which need to buy crude from international markets.
According to the latest RBI data, total forex reserves, including gold and SDRs, fell by $ 3,800 million to $ 296.2 billion during the week ended August 15, 2008. While foreign currency assets dipped by $ 3,785 million, SDRs and reserves with the IMF were down by $ 7 million and $ 8 million respectively.
The Central bank’s pile of forex reserves has dipped by over $ 13 billion since end-March this year.
The demand for the dollar was fuelled by overseas foreign borrowing repayment obligations and from foreign portfolio investors, who bought dollars to repatriate their earnings.
Oil suffers biggest one-day fall since 2004
Crude oil prices fell by more than $ 7 to $ 114 per barrel on August 22, 2008—the biggest one-day percentage slide since 2004, as dealers turned their focus to rising supply levels and the weakening global demand.
A rebound in the US dollar encouraged the sell-off applying downward pressure across the commodities markets by weakening the purchasing power of buyers using other currencies.
NCAER: GDP growth to slow to 7.8 pc
Conforming to forecast of the PM’s EAC, and other economists, economic think-tank NCAER has also projected moderation in economic growth at 7.8 per cent for the current fiscal, from its earlier estimate of 8.8 per cent.
The one per cent downward revision is attributed to the recent hike in interest rates, rising inflation, crude oil prices and reduction in the private investment by about Rs 60,000 crores.
Besides, increase in central government subsidies by Rs 20,000 crores and reduction in the world output by 1 per cent to 4 per cent in 2008 would have a bearing on the growth, according to the latest monthly report of the NCAER.
Though fiscal deficit is not projected to rise much above 3 per cent, the current account deficit is projected to grow to 6.5 per cent of GDP.
Notably, the Indian economy witnessed a growth of 9.1 per cent during 2007-08. |
|
|
print
this page
